Sarah: Meta puts in two-point-three billion, takes a billion back out, and quietly backstops thirteen billion in residual-value guarantees.
Sarah: The risk lands on bonds, leases, and your power bill.
Sarah: If you're just joining us, PJM's large-load fight goes well beyond interconnection queues.
Sarah: Data-center load is straining reliability, so capacity-market costs, backstop design, governance, and FERC oversight are all in play.
Sarah: The backdrop is a northern Virginia voltage disturbance where more than three gigawatts of data-center demand dropped to backup power
Sarah: followed by PJM board direction on resource adequacy
Sarah: affordability and large loads.
Matt: This is The Data Center Daily.
Matt: Meta finally names El Paso, Amazon goes on the record in Virginia, and Equinix hits the bond market for three billion.
Matt: Stick around — we're asking who's actually holding all that guarantee exposure.
Sarah: Meta's latest 10-Q names El Paso for the first time as the market behind its previously disclosed data-center co-development.
Sarah: The proposed structure deserves a close look, so here's the filing language.
Quote: In July 2026 we entered into an exclusivity agreement to co-develop a data center campus in El Paso
Quote: Texas through a venture in which we would hold a 20% membership interest.
Quote: The transaction is subject to the execution of definitive agreements and customary closing conditions.
Matt: What jumps out is the scale of the guarantee exposure next to Meta's minority stake.
Matt: Meta contributes billions
Matt: pulls out roughly a billion in cash
Matt: ends up with just twenty percent of the venture
Matt: then leases the assets back while backstopping a residual-value obligation that dwarfs the distribution.
Matt: Infrastructure capital and counterparties are going to stress-test that risk profile hard.
Sarah: Watch for the definitive agreements.
Sarah: Until those close, both the El Paso campus and this whole off-balance-sheet-adjacent structure are still contingent.
Sarah: How Meta ultimately books the residual-value guarantee will be worth watching for anyone modeling future hyperscaler joint ventures.
Sarah: Then there's the capex line in Meta's latest 10-Q.
Sarah: It reframes the scale of what they're building — take a listen.
Quote: Capital expenditures, including principal payments on finance leases, were $31.08 billion for the three months ended June 30, 2026.
Matt: And that's just one quarter.
Matt: It's sitting alongside a fresh twenty-five billion in senior unsecured notes and a brand-new line item for third-party AI token costs.
Matt: The spending pressure goes beyond what's in the ground; it's hitting the income statement in real time.
Sarah: Watch how Meta's compute build hits all three cost channels at once: capex, data-center opex, and now purchased AI inference.
Sarah: That bleed across multiple lines points to a surge lasting beyond one cycle.
Sarah: Here's Shane Snider at Data Center Knowledge:
Quote: Amazon urged Virginia regulators during hearings this month to allow hyperscale data center operators to voluntarily fund transmission
Quote: infrastructure serving their campuses
Quote: opening a debate over who should pay for grid expansions needed to support AI.
Quote: The proposal surfaced before the Virginia State Corporation Commission (SCC) in Dominion Energy Virginia’s annual Rider T1 proceeding
Quote: which determines how the utility recovers transmission costs from customers.
Matt: So Amazon walks into Dominion's Rider T1 hearing and volunteers to pay for its own transmission through CIAC.
Matt: Generous. Except their own witness
Matt: Cameron Brooks from E9 Insight
Matt: says the quiet part — it moves stranded-asset risk off the ratepayers and onto the guys driving the demand.
Sarah: Same cost-allocation fight as NV Energy's suit against Tract.
Sarah: NV Energy sues to force transparency; Amazon offers to pay in.
Sarah: Either way, who eats the grid upgrade?
Sarah: Amazon just answered on the record.
Matt: But it's voluntary. Brooks says the Commission can act immediately — sure, but only on a contribution Amazon chooses to make.
Matt: What's the enforcement mechanism if the campus scales down after the wire's already strung?
Sarah: And watch Dominion. Their answer: not here.
Sarah: Punt it to PJM because Rider T1 is exactly where transmission costs land on existing customers
Sarah: and they'd rather not set the precedent in an annual recovery case.
Matt: And this comes right after a Virginia voltage event knocked three-plus gigawatts of data-center load onto backup power.
Matt: The grid already flinched once.
Matt: Voluntary sounds a lot less charitable when the alternative is spreading that bill across every household in the footprint.
Sarah: Here's what Energy & Climate Counsel is reporting.
Matt: The PJM board actually put a number on it — 50 megawatts and you're on the Large Load Registry.
Matt: All week I've been asking for a threshold, and there it is. A line in the dirt.
Sarah: And the board went further: the directive is moving toward a FERC filing on reliability backstop procurement and interim resource adequacy
Sarah: service. We're past press-release territory; tariff language is taking shape.
Matt: Remember why this reached the board in the first place.
Matt: Foley Hoag traces it to that northern Virginia voltage disturbance — more than three gigawatts of data-center load dropping to backup power
Matt: at the same instant.
Matt: Three gigawatts, gone in a blink.
Matt: That's what pushed this up to the board.
Sarah: Nothing gets a board's attention like watching the load walk off the grid all at once.
Matt: And a 50-meg registry?
Matt: Meta's El Paso venture and Amazon's Virginia campuses clear that bar by an order of magnitude.
Matt: The registry is finally built for hyperscaler-scale accountability.
Sarah: Take Amazon's CIAC push from earlier and pair it with PJM's registry.
Sarah: In the same week, two regulators are using different mechanisms to keep large-load costs off the general ratepayer.
Sarah: Bloomberg Markets writes:
Quote: Data center firm Equinix Inc.
Quote: is aiming to raise at least $3 billion through the sale of US investment-grade bonds.
Quote: This move comes as the company capitalizes on a recent softening in the debt market
Quote: particularly for funding related to the burgeoning artificial intelligence (AI) boom.
Sarah: Equinix, at least $3 billion in investment-grade bonds, per Bloomberg.
Sarah: Yesterday, it was the record backlog and the raised guidance — today's the answer to how they pay for it: straight to the debt markets.
Matt: And they timed it — Bloomberg says they're leaning into a softening in the debt market.
Matt: When the window opens, the colo giants climb through it fast.
Sarah: For scale
Sarah: that three billion is more than the entire reported range for the TPG–Netrality carrier-hotel deal: two to three billion for eighteen
Sarah: properties and a hundred-plus megawatts.
Sarah: One Equinix bond run outsizes the whole portfolio.
Matt: There's your capital-intensity gap.
Matt: Meta floats twenty-five billion in senior notes, Equinix taps three — the bond market is basically becoming an AI-infrastructure ATM.
Sarah: No residual-value guarantee attached, either.
Sarah: After the Meta El Paso structure we just walked through, a plain vanilla bond raise feels almost quaint.
Matt: Honestly, refreshing.
Matt: Equinix borrows money, Equinix owes money — you can actually read the balance sheet.
Matt: Novel concept this week.
Host: If you follow the infrastructure powering AI, check out AI IPO Watch.
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Host: Find it wherever you listen to podcasts.
Host: Next up, we're watching PJM's actual FERC filing on reliability backstop procurement and interim resource adequacy service.
Host: You'll find links to every story in today's show notes if you want to dig into anything that caught your attention.
Host: That's The Data Center Daily for today.
Host: This is a Lantern Podcast.